Word: tarp
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...backing out of those arrangements, ceding some control of its Detroit institutions in return for rich infusions of government aid. The first infusion came on December 19th when President Bush announced that Chrysler, along with GM, would receive $13.4 billion of emergency loans from the Troubled Asset Relief Program (TARP) after Congress had refused to pass a separate bailout bill. On Christmas Eve Cerberus got another last-minute gift when the Federal Reserve Board voted to permit GMAC to change its status to a bank holding company. (GM still owns 49% of GMAC). (See pictures of the remains of Detroit...
GMAC also has applied for TARP funding and is counting on the benefits of its new bank status. "We'll also be able to broaden our deposit base as a bank holding company. We'll have access to more funds by ramping up our deposit taking over the Internet," says GMAC spokeswoman Gina Proia...
...plan will move $13.4 billion in funds from the Troubled Asset Relief Program (TARP) to GM and Chrysler, with GM getting $9.4 billion and Chrysler $4 billion. The money will be in the form of three-year loans, but the terms permit the Obama Administration to demand earlier repayment - presumably triggering bankruptcy - if it believes the restructuring goals are not being met. The near-term target is a March 31 deadline for the automakers to show a plan for achieving long-term viability. Based on White House and Treasury descriptions of the plan, this will be less an acid test...
...taxpayers) will stand behind senior secured lenders, getting first claim on the automakers' unencumbered assets, those not already pledged to a prior lender. GM says it has such assets - power trains, some foreign operations - and Chrysler says it has assets to secure the loans as well. As with other TARP assists, the government will also receive warrants that (theoretically, at least) could...
Though Ford is not receiving any of the $13.4 billion TARP funds, President and CEO Alan Mulally also expressed gratitude. Mulally also reiterated Ford's intent to stick to the plan it recently submitted to Congress, calling for the company to return to pre-tax profitability by 2011. That plan includes introducing more fuel-efficient vehicles - including a broader range of hybrid-electric vehicles. This week, Ford said it is doubling the output of hybrid vehicles in 2009. (See pictures of the remains of Detroit...